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MICROSOFT Assignment Questions

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Niranjan Sant
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7 views1 page

MICROSOFT Assignment Questions

Uploaded by

Niranjan Sant
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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MICROSOFT – ASSIGNMENT QUESTIONS

The Company follows a policy of deferring software revenues and


writing off software development costs as incurred.

(1) Exhibits 2 and 3 of the case provide the data on Income Statement and
the balance sheet respectively. Using these data, compute the impact on
operating income and the balance sheet if:

(1) Microsoft capitalizes 40% of the software development costs


(row 4 in Exhibit 2) and writes it off over 2 years starting from
the following year
(2) Microsoft eliminates deferred revenue policy (row “Unearned
Revenue” in Exhibit 3)
(3) Both (1) and (2).

(2) Why did Microsoft adopt these policies? While developing your
arguments, focus on (i) your computations done as mentioned above (ii)
the policy on R&D costs mentioned in the beginning of page 3 of the case
(iii) SOP 97-2 mentioned on page 4, and other data given in the case.

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